Report Shows Private Equity Best For Long-Term Investment
WASHINGTON, D.C. – With recent news coverage focusing on the relationship between private equity firms and pension funds, the latest Performance Update Report from the Private Equity Growth Capital…
WASHINGTON, D.C. – With recent news coverage focusing on the relationship between private equity firms and pension funds, the latest Performance Update Report from the Private Equity Growth Capital Council (PEGCC) shows once again that private equity is a superior source of returns for long-term investors.
According to the report, private equity funds invested by large U.S. pensions outperformed the public markets by 5.2 percentage points annually over a 10-year horizon. The median private equity benchmark return (excluding venture capital) was 12.8 percent, net of fees, over a 10-year horizon. The results are based on private equity fund returns as of December 31, 2014.
“Pension funds managing the retirements of teachers, police officers, firefighters, and public servants invest in private equity because it provides consistent, high returns over the long term,” said PEGCC President and CEO Steve Judge. “By forming a strong partnership, private equity firms and pension funds are able to ensure millions of hardworking Americans have the financial security they deserve.”
According to this latest report, CalPERS, the nation’s largest pension fund, currently has over $30 billion invested in private equity (10.3 percent of the total fund), and the pension’s private equity fund investments returned 12.9 percent, net of fees, annually over a 10-year horizon. By comparison, the S&P 500 returned 7.7 percent over that same period, including dividends.
“The data paint a clear picture: Private equity is an asset class that provides superior returns over the long-term with less volatility,” said Bronwyn Bailey, PEGCC’s Vice President of Research.
You can read the full report here.
